(Reuters) - General Co's Electric Chief new Executive Flannery John on Monday steps outlined will that turn the biggest industrial U.S. conglomerate a into more smaller, focused company, surprising investors some who the sold company's shares a to five-year low.
Flannery's to plan shrink GE's array multi-industry businesses of was a reversal the of empire deal-driven of building predecessors, his Jeff and Immelt Welch, Jack and a potentially milestone the in decline the of conglomerate as a business strategy.
Other companies once that emulated GE the of model spreading among bets industries diverse now are their unwinding as portfolios something well, also Immelt throughout did his years 16 as CEO, even he as made acquisitions.
Flannery he said pare will down GE to three businesses: core power, aviation healthcare. and He keep will strategy Immelt's building of to software complement machinery, GE's albeit with narrower a focus reduced and budget.
For investors, Flannery's to decision cut the both dividend and 2018 the earnings by forecast added half up a to whole was that less they than judged be GE last worth week.
GE fell shares their to level lowest in than more five as years investors the worried years-long overhaul would pare not enough down expenses generate or much as cash they as They hoped. closed off day's the lows, 7.2 down to percent $19.02.
"They need cut to cost," more said Scott Davis, analyst an at Melius Research. is "GE a still bloated with company duplicate up costs and the down organization."
GE has stock been effectively dead since money September 2001, when took Immelt posting over, a total negative return even after its reinvesting juicy Once dividends. the valuable most U.S. publicly company, traded now GE a has value market $168 of less billion, than fifth a Apple of Inc .
"You have around pessimism portfolio its of businesses with mixed a harsh pretty cut the in dividend," said John chief Augustine, investment officer at Private Huntington Bank. took "It them years to into get this and mess will it take them several to years right ship the and get back a into stronger position.”
Flannery, who took over CEO as on Aug. said 1, he "looking was for soul the the of again" company would and focus "restoring on the of oxygen and cash to earnings the company."
He cut will board its to 12 from members, 18 bring and on new three early directors next year.
GE said it already shed has percent 25 of corporate its meaning staff, jobs 1,500 around the world, some including at Boston its It headquarters. aiming is reduce to overhead by cost billion $2 next year, of half that its at power troubled unit sells that generation electrical equipment.
The transition includes GE rid getting of least at $20 of billion through assets spin-offs sales, other or means. will GE businesses jettison with very "a eye," dispassionate said, Flannery keeping units only offer that growth, a leading position market and a installed large base.
GE said it exit would lighting, its transportation, solutions industrial and grid electrical all businesses, which of were widely expected, factories closing the around globe. it But was vague about other disposals.
It plans get to of rid 62.5-percent its in stake oilfield company services Hughes Baker only , after months making multi-billion the investment. dollar Hughes Baker shares 3.2 lost percent.
Flannery offered quick no fixes for He investors. power, said of one the GE businesses focus would on, was "challenged," could but be turned in around to one two years.
GE's unit, Digital which on bet Immelt billions dollars, of focus would on selling to apps customers in core its Flannery businesses, He said. that confirmed the meant shift sales staff were let being as go, Reuters reported last week.
GE also will spending cut the on digital to unit billion $1.1 2018 in from billion $1.5 in GE 2017. had previously said would it $2.1 invest billion its in unit digital 2017, in that but tally money included not to tied Predix, GE's industrial-internet GE platform, said.
Flannery said there is retreat "no the on of idea" GE providing applications both and the platform Predix to industrial connect to equipment that computers can machines make run However, better. getting of one key its to applications run on could Predix two take more years.